Plastic Packaging Tax 2022 Explained to you
If you are in the shipping industry, you must have heard about the Plastic Packaging Tax introduced on 1st April 2022. This tax is very essential in the U.K market. The tax states the importance of recycled materials. It is to encourage the use of more sustainable packaging materials.
The Plastic Packaging Tax will be applied to packing materials that don’t contain at least 30% recycled plastic.
Today, we will discuss this particular tax in length.
What does the report state?
The tax will apply to primarily plastic-based packaging. A material must meet the following definition of “packaging” to be liable for the tax:
“Is a product that is designed to be suitable for use, whether alone or in combination with other products, in the containment, protection, handling, delivery or presentation of goods at any stage in the supply chain of the goods, from the producer of the goods to the consumer or user.”
This includes consumer products like bin bags, large bubble wrap rolls, party cups, etc. Additionally, plastic packaging supplies to pack food, goods, and transportation of items.
Plastic-based packaging doesn’t exclude bioplastic.
Recycled plastic includes plastic materials that are reprocessed by using chemicals or another manufacturing process. It can be used for original purposes or other purposes as well. This doesn’t include organic recycling.
In the U.K., the plastic packaging tax is set at £200 per tonne of plastic-based packaging in the market. According to the estimation of the government, this shall affect around 20,000 packaging producers and distributors in the country.
Small business owners who import less than 10 tonnes of plastic packaging materials a year are exempt from the tax. Once a business meets the limit, it must register with HMRC to report packaging data and pay the required tax.
Requirements to meet the Plastic Packaging Tax
This is an important point to understand.
The tax requires certain factors. If your brand has placed over 10 tonnes of plastic in 12 months, you will need to register with HMRC.
If you are under the 10 tonnes, there is no need to register prior to April 2022. Knowing the except amount might not be possible for everyone. If you think you have used more than the said limit, or will exceed it within the next 30 days, you need to register.
The key records needed are:
- The overall weight and the breakdown of the weight of the packaging materials used to manufacture the plastic-based packaging. This excludes supplies that are used in the transportation of imported goods.
- Calculation of a component if it is plastic for the most part and how much recycled plastic does it have.
- Weight of the exempted plastic materials and the reasons behind it.
- Weight of plastic packaging supplies
How the tax is applied?
In the U.K., HRMC describes plastic components as eligible for tax when the material is a ‘finished’ product. This is the time when the last important modifications are usually made.
The last modification is the last stage of the manufacturing process. This is when noteworthy changes are made to the nature of the packaging material. It alters:
- The shapes
In the U.K., when plastic packaging products are imported which contain goods, the tax will apply to the packaging. For other packaging components, the substantial modifications of extrusion, moulding, layering, laminating, forming, and printing will be included.
However, not all changes made to the packaging can be counted. For instance:
- Blowing or forming a packaging from a preform
- Cutting films in sizes or cutting formed trays out of a sheet
- Sealing like film attaching to a tub
- Glueing labels
Are you liable for the Plastic Packaging Tax?
To find that out, we have a simple diagram from HMRC.
Image Source:- https://www.clarity.eu.com/wp-content/uploads/2021/10/Plastic-Tax-Decision-Tree.jpg
Honestly, it is time to shift to paper-based packaging if you haven’t already. It is best to search for “cardboard boxes near me” and buy them from reliable wholesale suppliers like Packaging Midlands.
What are your thoughts on the Plastic Packaging Tax 2022? Let us know in the comments!